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What do reasonable insureds expect

Regarding what the expectations of insureds are, in Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co., [1993] 1 S.C.R. 252, while not in a part of the judgment expressly referring to reasonable expectations as an interpretive tool, the Supreme Court of Canada indicated that the expectation of the insured that all liabilities would be covered is relevant when assessing whether wording is sufficiently clear to transfer risk to an insured:
 
But, it should be noted that most insureds will purchase liability insurance assuming they are covered for all liability, and not realizing there may be gaps in the coverage they have purchased.  These considerations suggest that so-called "claims-made" policies should be examined with care to determine whether, read as a whole, they clearly transfer the risk of the long-term liability in question to the insured.
(Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co., [1993] 1 SCR 252).
 
It has been acknowledged that insureds may not have actively negotiated the terms of the policy and so would not have a specific expectation at all, and in that case the court should consider what an informed and reasonable person would have expected: 
 
[W]here a form contract such as an insurance policy prepared by one party is signed without negotiation by the other, or where (as in this case) the insured is simply the beneficiary under a policy negotiated by his union, the notion of the insured’s intention may be no more than a fiction.  For this reason, a court may seek to impose what it regards as a “commercially realistic” interpretation that assumes the author of the contract would have been aware of judicial authority and that the court should not create confusion on a question of law in the insurance industry without good reason.
(Gibbens v. Co-operators Life Insurance Company, 2008 BCCA 153).
 
Other cases have confirmed that the “expectation” considered is that of a reasonable person i.e. it is not the actual subjective expectation of the insured in question, but is the expectation of an objectively reasonable person in the position of the insured:
 
[I]t is difficult to understand how an insured could have a reasonable expectation of what loss may be covered if she has not read the policy. Moreover, the trial judge’s finding that, had she read it, Ms. Turpin may have found the policy difficult to understand is speculative and irrelevant, in that the test for the reasonableness of her expectations is objective.
(Turpin v. The Manufacturers Life Insurance Company, 2013 BCCA 282 at para. 45).

 

 
This book was written by Michael Dew, a Vancouver lawyer who practices civil litigation, including representing persons who have been denied coverage under property insurance policies, or liability insurance policies. If you have been denied insurance coverage and require assistance with making a claim against your insurer call Michael at 604 895 3160.